Southern Company’s “clean-coal” is new, untried technology that looks as if it can only bankrupt the state. If it even works, the electricity provided by the Kemper plant will likely be the most expensive in the United States. In fact, the costs associated with Kemper have raised eyebrows and concerns about the viability of “clean” coal throughout the industry. SMEPA alluded to costs and construction delays as the reason for backing out of the partnership.
SMEPA is a cooperative. The member associations provide service to more than 400,000 homes and businesses in 55 of Mississippi’s 82 counties. South Mississippi Electric and its members are consumer-owned, not-for-profit businesses. SMEPA had planned to buy a 15 percent stake in the project. Now, they’ve decided it’s just not worth it.
Southern Company had already notified regulators in Mississippi it may have to raise customer rates by as much as 41 percent to pay for the project. This comes after the Mississippi Supreme Court ruled that customers should be reimbursed for rate increases that were put in place last year: rate increases that were approved by Mississippi’s Public Service Commission after a whole lot of lobbying from both our current and previous governors.
The Mississippi Supreme Court declared that ratepayers’ money “is being confiscated through governmental decree, by a rate increase imposed by a privately owned corporation.” The court ordered Southern Company to issue refunds. Southern Company, naturally, requested a new hearing and has been running an incessant radio campaign offering “facts” to tout the validity of the Kemper project.
The “true” facts are the emperor has no clothes. The plant is now three times the initial projected cost, delays have been extensive, and Southern Company continues to make money promoting a “clean” coal pipe dream that dates back to the Reagan administration.
Now that SMEPA has backed out, Southern Company is accessing its options. Let’s just hope that one of the options is not hanging its subsidiary, MPC, out to dry. MPC is the smallest of the four operating companies Southern owns, serves the fewest customers and generates the least revenue. It may not be all that difficult for Southern Company to cut their enormous losses. They’ve done it before and come out all the more profitable. Just ask our former governor.
The credit rating group, Fitch Ratings, said that it was assessing MPC and Southern Company’s credit rating and it would likely be reduced a notch, maybe two. This would make the cost of doing Kemper-coal business even more expensive.
Our Mississippi’s Public Service Commissioners are now in an even bigger bind. They have to determine who pays for this boondoggle: Mississippi consumers and taxpayers or Southern Company and its shareholders.
Public Service Commissioner Steve Renfroe told the Mississippi Business Journal that “so much is up in the air now.” Renfroe is in the last year of his term as the Commissioner from South Mississippi, but stressed that the PSC initiated a cap to protect ratepayers and taxpayers. But as costs for the facility continue to rise, there is a growing concern over who pays the bills. Soon there will be a “prudency hearing” that will determine what additional costs for the plant were “necessary and effective.” That effective part will be even more laughable when they finally try to flip the switch.
“Even if those costs are considered prudent,” Renfro stated, “anything above the cap can not be passed on to ratepayers.” But you better believe Southern Company is interested in who ends up on the Public Service Commission come January 2016 and are supporting a few “choice” candidates.
Cecil Brown is likely not one, although you can bet Southern Company would be happy to throw money in his direction. A former state legislator who had his district gerrymandered out of existence by our Republican majority, Brown is running for Public Service Commissioner from the Central District. As a legislator, Brown says he voted for the Base Load Act that Mississippi Power Company used in funding the plants construction. “I became more interested when it became clear that the plant would be substantially over budget and the PSC would have serious decisions to make about the future of the project.”
Brown is hoping to see Mississippi “push for the development of all forms of energy: solar, wind, hydroelectric, geothermal.” He then added, “I also think we need to continue to try to find ways to produce nuclear energy safely.” As stated in a previous Kemper column: Grand Gulf has proven that we can and do. And it’s cheaper. Much cheaper.
Brown says he may be willing to give Southern Company the benefit of the doubt, “If clean coal works and is economically competitive, it could be part of the strategy.” He’s being too kind. Whether through gasification, carbon capture, or any other process referred to as “clean” in the industry’s clever Orwellian speak, burning more coal should never be considered part of any long-term energy strategy.
Coal is only economically competitive because our national leadership, and our state leadership, has spent billions propping up this cheap, dirty industry and its polluters for years. Even tree-hugging Al Gore has promoted the ridiculous “clean” coal concept. We have done this at the expense of real and sustainable energy development, better jobs, and a safer environment.
Brown is rightfully concerned about the future of MPC. “MPC serves 186,000 customers directly and another 400,000 through electric power associations. It is important to those folks that the company is able to continue service.” Still, Brown says he does not believe MPC customers should pay for the company’s mistake.
No consumer should have to supply a company money up front to promote a new technology. That’s a job for investors. One would think the rates should decrease with a better, high-efficiency plant, not increase. Thanks to our state leadership, we have been forced to do it backwards in Mississippi and now we are over a barrel of something that smells anything but “clean.”
» David Dallas is a political writer for the Mississippi Business Journal. He worked for former U.S. Sen. John Stennis and authored Barking Dawgs and A Gentleman from Mississippi.